not really due from A. to B.-will be good against C., although C. may have given full value to B. An I.O.U. is only an acknowledgment of a debt, and is not a negotiable instrument.

2. Again, suppose A. owes B. £500, and makes and gives B. his promissory note payable to bearer. This document can of course be handed by B. to C. so as to enable C. in his own name to sue A., without special notice of the transfer having been given to A.* If C. is a holder in due course,† his action against A. is not liable to be defeated by any defect of B.'s title ‡e.g. that the money was not really due from A. to B., § or that B. obtained the note from A. by fraud; for a promissory note is in the strict sense a negotiable instrument.

The following are negotiable instruments within this definition: bills of exchange, promissory notes (including bank notes), cheques, Exchequer Bills, East India bonds, dividend warrants, and some (though not all) scrip and bonds.

Now, if cheques are properly classed among negotiable instruments what is meant by a cheque crossed not negotiable? You are all aware of the effect which has been given to such a crossing by recent statutes, namely:-that a person taking such a cheque "shall not have and shall not be capable of giving a better title "than that which the person from whom he took it had."¶ In other words, he takes it subject to any defect of title of prior holders. If it has been stolen, no subsequent holder can get a good title to it. It fails, therefore, in one of the requisites of a negotiable instrument, but in other respects it is negotiable. It can be transferred, if payable to bearer, by mere delivery, and, if payable to order, by indorsement and delivery, and the holder can sue the drawer. But the latter, if sued, can raise by way of defence that the holder obtained it from a person who had no title to it. Its negotiable quality is therefore limited.

Here then we have an example of an instrument which in the strict sense is not negotiable, but which belongs to a class—i.e. cheques-which are, generally speaking, in the strict sense negoti

able. And we shall find that a number of instruments-such as bills of lading-are frequently spoken of as negotiable, although they fail in one of the requisites of a negotiable instrument in

*See Bills of Exchange Act, 1882, ss. 89 (1); 31 (1), (2); 38 (1).

† I.e. if he became holder of it in good faith and for value before it was overdue, and without notice that it had been previously dishonoured, or that there was any defect in B.'s title: See S. 29 of the same Act.

S. 38 (2), (3).

§ S. 28 (2).

Cf. Watson v. Russell (1862), 3 Best & Smith's Rep. 34; Illustration 5 to S. 29 (1) in Chalmers' Bills of Exchange Act, 1882, 5th ed. 89.

¶ Bills of Exchange Act, 1882, S. 81.

Contract of Affreightment.

9

the strict sense. In any case where the question becomes of importance to ascertain whether an instrument is or is not negotiable, it is therefore necessary first to decide in which of the two senses negotiable" is used-whether in the strict sense, where it is transferable by delivery, or indorsement and delivery, so as to confer an absolutely good title on every transferee who takes it in good faith and without notice of any defect, and where he can sue upon it in his own name; or, on the other hand, in a wider sense, where, for example, although it may be transferable by delivery, or by indorsement and delivery, and although the holder may be able to sue on it in his own name, the transferee will not necessarily get an absolutely good title, but the property will pass to him subject to any defect of title of his transferor or of any prior holder. Instruments of the latter class are more correctly described as quasi-negotiable. In dealing with particular instruments, I propose, as we come to them, to draw your attention to whether they are or are not in either sense negotiable.

Contract of Affreightment.

Let us now see what is meant by a contract of affreightment, and certain terms used in connection with that contract. The following explanation of these terms is given by Mr. Scrutton in his excellent work on the Contract of Affreightment as expressed in Charterparties and Bills of Lading: "When a shipowner.

*

agrees to carry goods by water, or to furnish a ship for the purpose of so carrying goods, in return for a sum of money to be paid to him, such a contract is "called a contract of affreightment, and the sum to be paid is "called freight.

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"When the agreement is to carry a complete cargo of goods, or to furnish a ship for that purpose, the contract of affreightment is almost always contained in a document called a charterparty, "the shipowner letting the ship for the purpose of carrying, or undertaking to carry, the charterer hiring the ship for such purpose, or undertaking to provide a full cargo. Such a document is usually signed before any steps are taken under the contract "it contains.

"When the agreement is to carry goods which form orly part of "the intended cargo of the ship, the contract of affreightment as "to each parcel of goods shipped is evidenced in a document called a bill of lading, which serves also as a receipt by the shipowner, acknowledging that the goods have been delivered to him for a certain purpose. A bill of lading is rarely signed until some steps have been taken in pursuance of the contract it evidences."

* 4th ed. pp. 1-2.

Bills of Lading.

Lord Blackburn-the greatest judicial authority of our time on commercial law-in his book on the Contract of Sale* thus defines a bill of lading:

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"A bill of lading is a writing signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt "of the goods, and undertaking to deliver them at the end of the voyage (subject to such conditions as may be mentioned in the "bill of lading). The bill of lading is sometimes an undertaking to deliver the goods to the shipper by name, or his assigns, sometimes to order or assigns, not naming any person, which is apparently the same thing, and sometimes to a consignee by name, or assigns, but in all its usual forms it contains the word assigns."

The form of a bill of lading was in times past shorter than the forms now commonly used, as will be seen by the following quaint example of a bill of lading of the 18th century:

Shipped by the grace of God in good order and well conditioned by James Robinson in and upon the good ship called the Mary Borough, whereof is master under God for this present voyage, Captain David Morton, and now riding at anchor at the Barr of Senegal, and by God's grace bound for Georgey, South Carolina, to say twenty-four prime slaves, six prime women slaves, being “marked and numbered as in the margin, and are to be delivered "in the like good order, and well conditioned, at the aforesaid port "of Georgey (the danger of the seas and mortality only excepted) "and so God send the good ship to her desired port in safety."Amen. (Signed) D. Morton."+

A bill of lading of the present day usually contains the following exceptions: "the act of God, the King's enemies, fire, and all and every other dangers, and accidents of the seas, rivers, and navigation of whatever nature and kind soever excepted"; and, in the case of steamships, "fire, machinery, boiler, steam and all "other dangers and accidents of steam nagivation are also excepted.‡

It also commonly undertakes to deliver the goods to a person named or to his assigns "he or they paying freight," and contains an agreement as to the adjustment of general average.

* 1st ed. 275; 2nd ed. 388-389.

† Scrutton on Charterparties and Bills of Lading, 4th ed. Preface, pp. ix-x. See a common form of a bill of lading given in Appendix to Anson on Contract, 9th ed. 377. More elaborate forms will be found in Appendix I to Mr. Scrutton's work, 4th ed. 326-328.

Usual Clauses in Bills of Lading.

11

General average arises where loss is caused intentionally in consequence of extraordinary sacrifices made or expenses incurred for the preservation of the ship and cargo, in order to avoid a common danger as by cutting away masts or throwing cargo overboard-and means the apportionment of such loss among all the parties interested in ship or cargo in proportion to their interest.* A very common clause is: "General Average payable according to "York-Antwerp Rules, 1890." This refers to a code of rules settled and adopted by a series of International conferences, including one at York in 1864, one at Antwerp in 1877, and one at Liverpool in 1890.†

In some cases a bill of lading contains a clause: "freight and all other conditions as per charterparty," and such a clause will incorporate in the bill of lading all such conditions in the charterparty to be performed by the consignee as are applicable to and consistent with the character of the bill of lading. Such a clause renders it unsafe to advance money on the security of the bill of lading without seeing what may be the liabilities under the charterparty; for the holder of a bill of lading may be made liable under such a clause, before he can obtain the goods, to pay charterparty demurrage at the port of loading or of discharge, even though he may be prevented from discharging his goods by the delay of other consignees. The assignee is held to be bound to look to the terms of the charterparty, which are incorporated in the bill of lading, and to perform them so far as they apply to the goods; and, therefore, where according to those terms the goods are deliverable on payment of demurrage, if the assignee fails to pay demurrage, he is not entitled to the goods; or, if they have already been delivered to him, the law implies a promise on his part that he will do all that the bill of lading says shall be done, e.g., pay any demurrage due; § unless, indeed, the goods have been delivered to him after he has expressly denied his liability to pay demurrage and declined to pay it-in which case no such promise can be implied.||

"By inveterate practice among most of the commercial nations "of Europe, bills of lading have long been drawn by the shipowner in sets of three or more ";¶ and a modern bill of lading

* See Scrutton, ibid. 215-216; and Anson on Contract, 9th ed. 377. note 2. Scrutton on Charterparties, etc., 4th ed. 226, note (m). The rules themselves will be found in Appendix IV, ibid, 361–365.

See Porteus v. Watney (1878), C.A. 3 Q.B.D. 534.

§ Wegener v. Smith (1854), 15 Common Bench Rep. 285. Comfort (1861), 10 Common Bench Rep. New Series, at 808, 809, 811.

|| County of Lancaster S.S. v. Sharp (1889), 24 Q.B.D.

Chappel v.

¶ Per Bowen, L.J., in Sanders v. Maclean (1883), 11 Q.B.D. at 341.

usually ends with the following clause: "In witness whereof, the "master of the said ship hath affirmed to three bills of lading, all "of this tenor and date, one of which bills being accomplished, the "others to stand void." Then follow the date and signature, and frequently the words: "Weight, quality, quantity and contents "unknown."

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"The bill of lading is, therefore," again to quote Lord Blackburn,* " a written contract, between those who are expressed to be 'parties to it, on behalf of their principals if they be agents, that "is, generally speaking, between the master of the ship on behalf "of the shipowners on the one part, and the shipper of the goods on behalf of his principal on the other part, by which it is agreed that the shipowner is to deliver the goods to the person who shall fill the character of assign. "The assignment of the bill of lading designates that person; "and the master, by delivering the goods to him, fulfils the contract, and by refusing to deliver them to him, he breaks the "contract; but (prior to the Bills of Lading Act of 1855) the assign of the bill of lading was not made a party to the contract with the master, nor could he, as assign, maintain in his own name, any action on the contract contained in the bill of lading. In this "respect, the assignment of a bill of lading differed greatly from "that of a bill of exchange, for the indorsee of a bill of exchange is by the law merchant entitled to sue the previous parties to the 'bill in his own name, and is by the indorsement rendered a party to the contract, though not one originally "; but in the case of a bill of lading it was different, and there was no means whatsoever by which any person could be rendered a party to the (( contract " evidenced by a bill of lading, who was not a party to it from its first inception. Even if the assign of the bill of "lading had acquired the full legal and equitable property in the goods, so that the damage arising from the non-delivery was exclusively his, still he was compelled to bring any action on the contract in the name of the original contractor as his trustee "; for, at common law and apart from the customs of the law merchant, the rule, as we have seen, was that a right of action arising from contract could not be assigned so as to enable the assign to sue upon it in his own name, and no custom of merchants was ever recognised in the Courts, making an action on a bill of lading an exception to that rule.

If, then, goods were sold, and consigned to the seller's agent, the assignment of the bill of lading to the buyer was, according to the law merchant, good evidence of his right of property to the goods, but until 1855 he had no right to sue in his own name on the contract evidenced by the bill of lading.

* Blackburn on Sale, 2nd ed. 389-390; cf. 1st ed. (1845), 275-276.